Key Points

Review these 10 money wasters to make sure you're not taken by surprise.

Dear Readers,

No matter how conscientious you may try to be, certain money wasters can creep up on you. Some may be staring you in the face, but others can be lurking in the shadows just waiting to snatch some of your hard-earned cash. Best to be forewarned. Review these 10 scary (and very common!) money wasters now so you won't be taken by surprise.

1. Credit card interest and late fees—While credit cards make life easier, they can also be a big drain if you don't watch out. Do you carry a balance month-to-month? Are you sometimes late on your payments? Interest rates and late fees can add up quickly and result in paying considerably more for your purchases over time.

2. Low credit score—This is a particularly sneaky one. If you have a low credit score, while you still may be able to get a loan, you're likely to pay a lot more for it. A low score usually equals a higher interest rate and higher points on a mortgage. It can even cost you in terms of your ability to rent an apartment—or in some cases—get a job.

3. Being under or over insured—Paying for minimal insurance coverage may save on premiums, but it could end up putting you in financial jeopardy. Not having enough medical, auto or homeowners insurance could mean big bills when you're least able to pay. If you opt for less insurance, be sure you have enough socked away to cover deductibles, co-pays and the added expense of self-coverage.

On the other hand, don't be lured into buying insurance you likely don't need. Typical insurance “gotchas” can be things like life insurance for children, pet insurance, flight insurance, rental car damage insurance—even wedding insurance.

4. Taking Social Security too soon—Don't jump to collect if you don't have to. If you elect to take your Social Security benefits at 62, they will be permanently reduced by about 25 to 30 percent of what you would get at Full Retirement Age. If you can wait even longer, your benefit will increase by approximately 8 percent each year past your Full Retirement Age up to age 70. Depending on your situation, that could amount to a hefty bonus over time!

5. Leaving 401(k) money on the table—If you don't contribute to your 401(k) at least up to the employer match, you're giving up free money. Not only that, you're missing out on the potential tax-free growth of your savings. Taken together, that can add up to a pretty scary loss—particularly come retirement.

6. Buying a brand new car—A new car depreciates the minute you drive it off the lot. It can be hard to pass up the latest model, especially if it has the latest safety features, but understand that it comes at a premium. Even a car with only a few thousand miles on it will cost you considerably less upfront as well as over time if you finance it.

7. Cable and Internet fees—A yearly cost increase may seem like a fact of digital life, but you don't have to accept it. Most cable and internet companies are willing to negotiate. Take the time to call the company and discuss alternatives. You might be surprised at how amenable they are.

8. Bank fees—ATM fees, account fees, foreign transaction fees—they can definitely catch you unaware! Review your statements so you know exactly what you're being charged. If you're unpleasantly surprised by the fees you're paying, talk to your bank. Still unhappy? Change banks. There are many no-fee options out there.

9. Gym memberships and other things you don't use—We all have the best of intentions. Of course, we'll go to the gym several times a week. No way will we miss a performance at the opera. But be realistic. Unused gym memberships are a classic waste of money. Likewise, season tickets. Make sure you're really committed before shelling out money in advance.

10. Extended warranties—They sound like a wise idea but extended warranties are almost always a waste of money. Besides, most credit card companies include extended warranties as a perk. Why pay extra for something you may already have?

Letting any one of these money wasters drain your coffers means you'll have just that much less to spend on the things you need or want. Don't be surprised—be in charge.

Happy Halloween!

Have a personal finance question? Email us ataskcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries,contact Schwab.

The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.

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